Illinois 529 Plan: What College Savers Should Know

According to the Federal Reserve, In September 2023, Illinois held about:^[1]

• $17.3 billion in 529 college savings accounts
• $555 million in 529 prepaid tuition accounts
• $17.8 billion across all 529 accounts

529 plans are designed to help people save for college expenses. They can save for themselves or for a beneficiary, like a child or a grandchild.

State residents can take advantage of tax benefits for using an Illinois 529 plan. Here's what savers should know.

Illinois 529 Plans

Illinois currently offers two 529 plans. It used to also offer a prepaid tuition plan called the College Illinois! 529 Prepaid Tuition Program. However, this plan is no longer accepting new enrollments.

Illinois' 529 plans include a self-guided plan — meaning that you select investments on your own — and an advisor-led plan — where a financial advisor can help you. The advisor-guided 529 plan in Illinois comes with higher upkeep fees.

Check out the plans below:

Bright Start College Savings Program

• Requires State Residency? No
• K-12 Expenses Eligible? No
• Fees: 0.07-0.79%
• Performance Notes: The Index Age-Based Moderate fund for ages 6-8 has earned 5.18% in average annual returns over its lifetime.

Bright Directions Advisor-Guided 529 College Savings Program

• Requires State Residency? No
• K-12 Expenses Eligible? No
• Fees: 0.14-1.54%
• Performance Notes: The Class-A Age-Based Moderate option for ages 6-8 has earned 5.56% in average annual returns over its lifetime.

529 Plan Illinois Pros and Cons

Pros

• Anyone can participate in an Illinois 529 plan — not just state residents.
• Illinois residents get tax advantages for participating. According to the College Savings Plan Network^[2], single state residents can deduct their annual contributions to an Illinois 529 plan — up to $10,000. Married state residents who file jointly can deduct up to $20,000.
• In Illinois, you can contribute up to $500,000 in total to college savings plans.^{Note Reference [2]}

Cons

• Unlike some other state-sponsored 529 plans, you can't use savings in an Illinois 529 plan to pay for K-12 educational expenses. It's for college costs only.